Ensco plc Reports Fourth Quarter and Full-Year 2012 Results

Record Full-Year 2012 Revenues and EarningsReinvested a Record
$1.8 Billion in Fleet#1 Total Customer Satisfaction RatingRealized
More Than $100 Million of Targeted Expense SynergiesSold
Additional Rigs as Part of Continuous High-Grading StrategyENSCO
8505 Commences Initial Term Contract and ENSCO 8506 Delivered

February 20, 2013 07:38 PM Eastern Time

LONDON--(BUSINESS WIRE)--Ensco plc (NYSE: ESV) reported diluted earnings per share from
continuing operations of $1.04 in fourth quarter 2012, compared to $0.97
per share in fourth quarter 2011. Discontinued operations primarily
related to rigs and other assets no longer on the Company’s balance
sheet resulted in a loss of $0.10 per share in fourth quarter 2012.
Earnings from discontinued operations in fourth quarter 2011 were $0.02
per share. Diluted earnings per share were $0.94 in fourth quarter 2012,
compared to $0.99 in fourth quarter 2011.

“Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations”

Certain items influenced earnings per share from continuing operations
comparisons year to year. Provision for income taxes in fourth quarter
2012 included $75 million, $0.33 per share, in discrete tax items
including $51 million related to restructuring certain subsidiaries from
the 2011 acquisition and $24 million of additional discrete tax items
primarily related to adjustments of certain prior year tax positions.
Professional fees, severance payments and other acquisition-related
costs in fourth quarter 2011 general and administrative expense totaled
approximately $8 million, $0.03 per share. In addition, fourth quarter
2011 contract drilling expense included approximately $4 million, $0.02
per share, of severance and relocation costs related to the acquisition.
Adjusted for these items, fourth quarter earnings per share from
continuing operations increased approximately 34% year to year to $1.37
from $1.02.

Full-year 2012 diluted earnings per share from continuing operations
were $5.23, compared to $3.09 per share in 2011. Discontinued operations
resulted in a loss of $0.19 per share in 2012, compared to a loss of
$0.01 per share in 2011. The $0.19 per share loss from discontinued
operations in 2012 includes losses from asset sales and operating
results during the first three quarters of 2012 that were reclassified
from continuing operations to discontinued operations. Diluted earnings
per share were $5.04 in 2012, compared to $3.08 in 2011.

Chairman, President and Chief Executive Officer Dan Rabun stated, “The
past year has been a remarkable period of growth for Ensco. We achieved
record revenues and earnings as we added new ultra-deepwater rigs,
increased utilization and benefited from rising customer demand. During
the year, we delivered ENSCO 8505 and ENSCO 8506, the final two rigs in
the ENSCO 8500 Series®, as well as ENSCO DS-6, our fourth
Samsung DP-3 ultra-deepwater drillship. Each of these rigs has commenced
work on multi-year programs for repeat customers, reinforcing the
advantages of fleet standardization.”

Mr. Rabun added, “We are gratified to, once again, achieve the #1
customer satisfaction award given the exceptional work of our crews who
achieved the best safety record in our history and a significant
increase in overall rig utilization. All of this was accomplished as we
integrated our acquisition - achieving expense synergies above initial
targets.”

Mr. Rabun concluded, “Ensco’s growth will continue as we complete the
construction of six additional rigs that are scheduled for delivery
through the end of next year. These rigs will provide future earnings
growth and afford us the flexibility to invest further in our fleet
while returning additional capital to shareholders.”

Revenues grew 12% to $1.086 billion in fourth quarter 2012 from $973
million a year ago. A growing active fleet, higher average day rates in
the jackups segment and improved utilization and average day rates for
the floaters segment contributed to this increase.

Contract drilling expense was $525 million, up from $498 million in
fourth quarter 2011. More rigs in the active fleet as well as higher
utilization in the floaters segment drove this increase along with a
rise in unit labor costs. Warranty claim settlements of $11 million
related to lost revenues and costs incurred in prior periods reduced
fourth quarter 2012 contract drilling expense. Adjusted for this item
and acquisition-related costs equaling $4 million in fourth quarter
2011, contract drilling expense increased 9%.

Depreciation expense was $144 million, compared to $137 million a year
ago. The $7 million increase was mostly due to the addition of ENSCO
8505 to the active fleet.

General and administrative expense declined to $35 million from $40
million in fourth quarter 2011. Acquisition-related costs in fourth
quarter 2011 equaled $8 million as noted above.

Interest expense in fourth quarter 2012 was $28 million, net of $28
million of interest that was capitalized, compared to interest expense
of $41 million in fourth quarter 2011, net of $17 million of interest
that was capitalized.

Segment Highlights

In fourth quarter 2012, the Company changed its segment reporting. All
drillships and semisubmersibles are now reflected in a Floaters segment.
The Jackups and Other segments are unchanged.

Floaters

Floater revenues were $672 million in fourth quarter 2012, up 10% from
$610 million a year ago. A full quarter of operations for ENSCO DS-5,
the commencement of ENSCO 8505, and an increase in the average day rate
and utilization contributed to this growth. The average day rate
increased to $368,000 from $342,000 in fourth quarter 2011. Utilization
improved three percentage points to 83%.

Floater contract drilling expense was $313 million in fourth quarter
2012, up from $312 million in fourth quarter 2011. Adjusted for warranty
claim settlements of $11 million noted above and ENSCO 5005 and ENSCO
DS-1 deferring expenses related to shipyard upgrades, contract drilling
expense increased 9%. Commencement of operations for ENSCO 8505 and an
increase in unit labor costs contributed to this increase.

Jackups

Jackup revenues grew 15% to $393 million, up from $341 million a year
ago. The increase was due to a $14,000 increase in the average day rate
to $111,000, partially offset by a one percentage point decline in
utilization to 87%. A broad-based pickup in customer demand around the
world drove the increase in average day rate. Contract drilling expense
increased $29 million to $196 million, mostly due to an increase in unit
labor costs.

Other

Other is composed of managed drilling rig operations. Revenues decreased
to $20 million from $22 million in fourth quarter 2011 due to a $12,000
decline in average day rates. Contract drilling expense was $15 million,
compared to $19 million a year ago. The decreases in average day rate
and contract drilling expense are related to declining crew requirements
year to year.

EVP and Chief Financial Officer Jay Swent commented, “Capital
expenditures for full-year 2012 totaled $1.8 billion of which $1.3
billion, or 72%, was invested in new construction. These investments,
coupled with $1.9 billion of remaining contractual commitments for rigs
being constructed through 2014, will propel the future growth of our
company. We also continued to high-grade our fleet by selling two
additional rigs in the fourth quarter.”

Mr. Swent added, “We exceeded our 2012 expense synergy target of $100
million related to the acquisition and we remain on track to deliver
additional synergies in 2013. During 2012, we also restructured
subsidiaries from our acquisition to achieve enhanced tax efficiencies
and improve capital management flexibility. For full-year 2013, we
expect our effective tax rate to be approximately 12%.”

Ensco will conduct a conference call at 10:00 a.m. Central Time (4:00
p.m. London time) on Thursday, 21 February 2013 to discuss fourth
quarter 2012 results. The call will be webcast live at www.enscoplc.com.
Interested parties may listen to the call by dialing (866) 524-3160 from
within the United States and +1 (412) 317-6760 from outside the U.S.
Please ask for the Ensco conference call. It is recommended that
participants call fifteen minutes before the scheduled start time.

A replay of the conference call will be available by telephone one hour
after the completion of the call through 6 March 2013 by dialing (877)
344-7529 or, if calling from outside the U.S. +1 (412) 317-0088
(Conference ID 10023271). A webcast replay, MP3 download and transcript
of the call will be available at www.enscoplc.com.

Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. For more than 25
years, the company has focused on operating safely and exceeding
customer expectations. Ensco is ranked #1 for total customer
satisfaction with top honors in 10 separate categories in the most
recent annual survey by EnergyPoint Research. Operating the world’s
newest ultra-deepwater fleet and largest fleet of active premium
jackups, Ensco has a major presence in the most strategic offshore
basins across six continents. Ensco plc is an English limited company
(England No. 7023598) with its registered office and corporate
headquarters located at 6 Chesterfield Gardens, London W1J 5BQ. To learn
more, visit our website at www.enscoplc.com.

Statements contained in this press release that are not historical
facts are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements include words or phrases such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “could,” “may,” “might,” “should,” “will” and similar words
and specifically include statements regarding expected financial
performance, effective tax rate, day rates and backlog; the expected
synergies from the integration of Pride International’s operations; the
timing of delivery, mobilization, contract commencement, relocation or
other movement of rigs; and general market, business and industry
conditions, trends and outlook.Such statements are subject to
numerous risks, uncertainties and assumptions that may cause actual
results to vary materially from those indicated, including downtime and
other risks associated with offshore rig operations, relocations, severe
weather or hurricanes; changes in worldwide rig supply and demand,
competition and technology; future levels of offshore drilling activity;
governmental action, civil unrest and political and economic
uncertainties; terrorism, piracy and military action; risks inherent to
shipyard rig construction, repair, maintenance or enhancement; possible
cancellation or suspension of drilling contracts as a result of
mechanical difficulties, performance or other reasons; the outcome of
litigation, legal proceedings, investigations or other claims or
contract disputes; governmental regulatory, legislative and permitting
requirements affecting drilling operations; our ability to attract and
retain skilled personnel on commercially reasonable terms; environmental
or other liabilities, risks or losses; debt restrictions that may limit
our liquidity and flexibility; our ability to realize the expected
benefits from our redomestication and actual contract commencement dates.In addition to the numerous factors described above, you should also
carefully read and consider “Item 1A. Risk Factors” in Part I and “Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in Part II of our most recent annual report on
Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q,
which are available on the SEC’s website at www.sec.gov
or on the Investor Relations section of our website at www.enscoplc.com.Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update
or revise any forward-looking statements, except as required by law.

ENSCO PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

OPERATING REVENUES

$

1,085.5

$

973.2

$

4,300.7

$

2,797.7

OPERATING EXPENSES

Contract drilling (exclusive of depreciation)

524.5

498.3

2,028.0

1,449.1

Depreciation

143.9

136.5

558.6

408.9

General and administrative

35.0

40.3

148.9

158.6

703.4

675.1

2,735.5

2,016.6

OPERATING INCOME

382.1

298.1

1,565.2

781.1

OTHER INCOME (EXPENSE)

Interest income

5.5

8.2

22.8

17.2

Interest expense, net

(28.1

)

(41.4

)

(123.6

)

(95.9

)

Other, net

0.9

4.7

2.2

20.8

(21.7

)

(28.5

)

(98.6

)

(57.9

)

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

360.4

269.6

1,466.6

723.2

PROVISION FOR INCOME TAXES

117.1

44.0

244.4

115.4

INCOME FROM CONTINUING OPERATIONS

243.3

225.6

1,222.2

607.8

DISCONTINUED OPERATIONS, NET

(22.1

)

4.8

(45.5

)

(2.2

)

NET INCOME

221.2

230.4

1,176.7

605.6

NONCONTROLLING INTERESTS

(1.7

)

(1.0

)

(7.0

)

(5.2

)

NET INCOME ATTRIBUTABLE TO ENSCO

$

219.5

$

229.4

$

1,169.7

$

600.4

EARNINGS (LOSS) PER SHARE - BASIC

Continuing Operations

$

1.04

$

0.97

$

5.24

$

3.10

Discontinued Operations

$

(0.10

)

$

0.02

$

(0.19

)

$

(0.01

)

$

0.94

$

0.99

$

5.05

$

3.09

EARNINGS (LOSS) PER SHARE - DILUTED

Continuing Operations

$

1.04

$

0.97

$

5.23

$

3.09

Discontinued Operations

$

(0.10

)

$

0.02

$

(0.19

)

$

(0.01

)

$

0.94

$

0.99

$

5.04

$

3.08

NET INCOME ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED

$

217.0

$

226.8

$

1,157.4

$

593.5

WEIGHTED-AVERAGE SHARES OUTSTANDING

Basic

230.0

228.4

229.4

192.2

Diluted

230.3

229.0

229.7

192.6

ENSCO PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

December 31,

December 31,

2012

2011

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

487.1

$

430.7

Accounts receivable, net

811.4

851.7

Other

425.4

398.9

Total current assets

1,723.9

1,681.3

PROPERTY AND EQUIPMENT, NET

13,145.6

12,421.9

GOODWILL

3,274.0

3,274.0

OTHER ASSETS, NET

421.8

521.6

$

18,565.3

$

17,898.8

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accrued liabilities and other

$

942.2

$

1,160.1

Short-term debt

-

125.0

Current maturities of long-term debt

47.5

47.5

Total current liabilities

989.7

1,332.6

LONG-TERM DEBT

4,798.4

4,877.6

DEFERRED INCOME TAXES

351.7

339.5

OTHER LIABILITIES

573.4

464.6

TOTAL EQUITY

11,852.1

10,884.5

$

18,565.3

$

17,898.8

ENSCO PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Twelve Months Ended

December 31,

2012

2011

OPERATING ACTIVITIES

Net income

$

1,176.7

$

605.6

Adjustments to reconcile net income to net cash provided by

operating activities:

Discontinued operations, net

45.5

2.2

Depreciation expense

558.6

408.9

Other

(7.8

)

(12.4

)

Changes in operating assets and liabilities

427.2

(272.5

)

Net cash provided by operating activities of continuing

2,200.2

731.8

operations

INVESTING ACTIVITIES

Additions to property and equipment

(1,802.2

)

(729.0

)

Acquisition of Pride International, Inc., net of cash acquired

-

(2,656.0

)

Other

(42.3

)

0.8

Net cash used in investing activities of continuing

(1,844.5

)

(3,384.2

)

operations

FINANCING ACTIVITIES

Cash dividends paid

(348.1

)

(292.3

)

Commercial paper borrowings, net

(125.0

)

125.0

Equity issuance reimbursement (cost)

66.7

(70.5

)

Reduction of long-term borrowings

(47.5

)

(213.3

)

Proceeds from issuance of senior notes

-

2,462.8

Debt financing costs

-

(31.8

)

Other

18.4

24.2

Net cash (used in) provided by financing activities of continuing

(435.5

)

2,004.1

operations

DISCONTINUED OPERATIONS

Operating activities

(13.1

)

0.4

Investing activities

147.3

28.7

Net cash provided by discontinued operations

134.2

29.1

Effect of exchange rate changes on cash and cash equivalents

2.0

(0.8

)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

56.4

(620.0

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

430.7

1,050.7

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

487.1

$

430.7

ENSCO PLC AND SUBSIDIARIES

OPERATING STATISTICS

(Unaudited)

Third

Fourth Quarter

Quarter

2012

2011

2012

Rig utilization(1)

Floaters

83

%

80

%

90

%

Jackups

87

%

88

%

87

%

Total

86

%

85

%

88

%

Average day rates(2)

Floaters

$

367,718

$

341,841

$

363,416

Jackups

111,459

96,927

108,588

Total

$

199,025

$

176,204

$

200,409

(1)

Rig utilization is derived by dividing the number of days under
contract by the number of days in the period. Days under contract
equals the total number of days that rigs have earned a day rate,
including days associated with compensated downtime and
mobilizations. For newly-constructed or acquired rigs, the number of
days in the period begins upon commencement of drilling operations
for rigs with a contract or when the rig becomes available for
drilling operations for rigs without a contract.

(2)

Average day rates are derived by dividing contract drilling
revenues, adjusted to exclude certain types of non-recurring
reimbursable revenues, lump sum revenues and revenues attributable
to amortization of drilling contract intangibles, by the aggregate
number of contract days, adjusted to exclude contract days
associated with certain mobilizations, demobilizations, shipyard
contracts and standby contracts.